"It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price."
Warren Buffett
The Solvency Score is a metric used to assess a company's long-term solvency risk. It is an essential tool for investors to evaluate the financial health and risk profile of a company over the long term.
Calculation
The Solvency Score is generated using a multi-factor algorithm that takes into account a range of financial ratios and indicators such as Debt to Equity Ratio, Interest Coverage Ratio, and Current Ratio, among others. These factors are normalized and weighted to produce a single score on a scale of 0 to 100.
Interpretation
| 0-30 | High risk of insolvency |
| 31-69 | Moderate risk |
| 70-100 | Low risk of insolvency |
The Bottom Line
The Solvency Score is a powerful, data-driven metric that offers an instant snapshot of a company's long-term financial health.